Dow drops 1,000 points, and Japanese stocks suffer worst crash since 1987 as markets quake worldwide

NEW YORK (AP) — A scary Monday that started with a plunge abroad reminiscent of 1987 ’s crash swept around the world and pummeled Wall Street with more steep losses, as fears worsened about a slowing U.S. economy.

The S&P 500 dropped 3% for its worst day in nearly two years. The Dow Jones Industrial Average reeled by 1,033 points, or 2.6%, while the Nasdaq composite slid 3.4% as Apple, Nvidia and other Big Tech companies that used to be the stars of the stock market continued to wilt.

The drops were the latest in a global sell-off that began last week. Japan’s Nikkei 225 helped begin Monday by plunging 12.4% for its worst day since the Black Monday crash of 1987.

It was the first chance for traders in Tokyo to react to Friday’s report showing U.S. employers slowed their hiring last month by much more than economists expected. That was the latest piece of data on the U.S. economy to come in weaker than expected, and it’s all raised fear the Federal Reserve has pressed the brakes on the U.S. economy by too much for too long through high interest rates in hopes of stifling inflation.

Professional investors cautioned that some technical factors could be amplifying the action in markets, and that the drops may be overdone, but the losses were still neck-snapping. South Korea’s Kospi index careened 8.8% lower, and bitcoin dropped below $54,000 from more than $61,000 on Friday.

Even gold, which has a reputation for offering safety during tumultuous times, slipped about 1%.

That’s in part because traders began wondering if the damage has been so severe that the Federal Reserve will have to cut interest rates in an emergency meeting, before its next scheduled decision on Sept. 18. The yield on the two-year Treasury, which closely tracks expectations for the Fed, briefly sank below 3.70% during the morning from 3.88% late Friday and from 5% in April. It later recovered and pulled back to 3.89%.

“The Fed could ride in on a white horse to save the day with a big rate cut, but the case for an inter-meeting cut seems flimsy,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Those are usually reserved for emergencies, like COVID, and an unemployment rate of 4.3% doesn’t really seem like an emergency.”

Of course, the U.S. economy is still growing, the U.S. stock market is still up a healthy amount for the year and a recession is far from a certainty. The Fed has been clear about the tightrope it began walking when it started hiking rates sharply in March 2022: Being too aggressive would choke the economy, but going too soft would give inflation more oxygen and hurt everyone.

Goldman Sachs economist David Mericle sees a higher chance of a recession within the next 12 months following Friday’s jobs report. But he still sees only a 25% probability of that, up from 15%, in part “because the data look fine overall” and he does not “see major financial imbalances.”

Some of Wall Street’s recent declines may simply be air coming out of a stock market that romped to dozens of all-time highs this year, in part on a frenzy around artificial-intelligence technology. Critics have been saying for a while that the stock market looked expensive after prices rose faster than corporate profits.

“Markets tend to move higher like they’re climbing stairs, and they go down like they’re falling out a window,” according to JJ Kinahan, CEO of IG North America. He chalks much of the recent worries to euphoria around AI subsiding, with pressure rising on companies to show how AI is turning into profits, and “a market that was ahead of itself.”

The only way for stocks to look less expensive is either for prices to fall or for their profits to strengthen. Expectations are still high for the latter, with growth for S&P 500 profits this past quarter looking to be the strongest since 2021.

Professional investors also pointed to the Bank of Japan’s move last week to raise its main interest rate from nearly zero. Such a move helps boost the value of the Japanese yen, but it could also force traders to scramble out of deals where they borrowed money for virtually no cost in Japan and invested it elsewhere around the world.

Treasury yields also pared their losses Monday after a report said growth for U.S. services businesses was a touch stronger than expected. Growth was led by arts, entertainment and recreation businesses, along with accommodations and food services, according to the Institute for Supply Management.

Still, stocks of companies whose profits are most closely tied to the economy’s strength took sharp losses on the fears about a slowdown. The small companies in the Russell 2000 index dropped 3.3%, washing out what had been a revival for it and other beaten-down areas of the market.

Making things worse for Wall Street, Big Tech stocks tumbled as the market’s most popular trade for much of this year continued to unravel. Apple, Nvidia and a handful of other Big Tech stocks known as the “ Magnificent Seven ” had propelled the S&P 500 to record after record this year, even as high interest rates weighed down much of the rest of the stock market.

But Big Tech’s momentum turned last month on worries investors had taken their prices too high and expectations for future growth are becoming too difficult to meet. A set of underwhelming profit reports that began with updates from Tesla and Alphabet added to the pessimism and accelerated the declines.

Apple fell 4.8% Monday after Warren Buffett’s Berkshire Hathaway disclosed that it had slashed its ownership stake in the iPhone maker.

Nvidia, the chip company that’s become the poster child of Wall Street’s AI bonanza, fell even more, 6.4%. Analysts cut their profit forecasts over the weekend for the company after a report from The Information said Nvidia’s new AI chip is delayed. The recent selling has trimmed Nvidia’s gain for the year to nearly 103% from 170% in the middle of June.

Another Big Tech titan, Alphabet, fell 4.4% after a U.S. judge ruled Google’s search engine has been illegally exploiting its dominance to squash competition and stifle innovation.

All told, the S&P 500 fell 160.23 points to 5,186.33. The Dow sank 1,033.99 to 38,703.27, and the Nasdaq composite tumbled 576.08 to 16,200.08.

Worries outside corporate profits, interest rates and the economy are also weighing on the market. The Israel-Hamas war may be worsening, which beyond its human toll could cause sharp swings for the price of oil. That’s adding to broader worries about potential hotspots around the world, while upcoming U.S. elections could further scramble things.

Wall Street has been concerned about how policies coming out of November could impact markets, but the sharp swings for stock prices could affect the election itself.

The threat of a recession is likely to put Vice President Kamala Harris on the defensive. But slower growth could also further reduce inflation and force former President Donald Trump to pivot from his current focus on higher prices to outlining ways to revive the economy.

“It comes down to jobs,” said Quincy Krosby, chief global strategist for LPL Financial. Jobs drive spending by U.S. consumers, which in turn is the biggest part of the U.S. economy.

“When we get to election day, the unemployment rate is going to be extremely important.”

AP Business Writers Elaine Kurtenbach, Matt Ott, Christopher Rugaber and Damian J. Troise contributed.

Trader James Conti on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. (AP Photo/Richard Drew)

Traders work on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. (AP Photo/Richard Drew)

Specialist Anthony Matesic works at his post on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. (AP Photo/Richard Drew)

A screen above the trading floor of the New York Stock Exchange shows the closing number for the Dow Jones industrial average, Monday, Aug. 5, 2024. (AP Photo/Richard Drew)

Specialist Anthony Matesic works at his post on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. (AP Photo/Richard Drew)

Specialist Michael Gagliano, left, confers with a colleague on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024.(AP Photo/Richard Drew)

Trader Leon Montana works on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. (AP Photo/Richard Drew)

A pair of traders work on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. Nearly everything on Wall Street is tumbling as fear about a slowing U.S. economy worsens and sets off another sell-off for financial markets around the world. (AP Photo/Richard Drew)

Specialist Gregg Maloney works at his post on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. Nearly everything on Wall Street is tumbling as fear about a slowing U.S. economy worsens and sets off another sell-off for financial markets around the world. (AP Photo/Richard Drew)

Trader Robert Charmak works on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. Nearly everything on Wall Street is tumbling as fear about a slowing U.S. economy worsens and sets off another sell-off for financial markets around the world. (AP Photo/Richard Drew)

Trader Michael Milano works on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. (AP Photo/Richard Drew)

NYSE President Lynn Martin watches trading on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. Nearly everything on Wall Street is tumbling as fear about a slowing U.S. economy worsens and sets off another sell-off for financial markets around the world. (AP Photo/Richard Drew)

A television screen on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024, headlines trading. Nearly everything on Wall Street is tumbling as fear about a slowing U.S. economy worsens and sets off another sell-off for financial markets around the world. (AP Photo/Richard Drew)

Specialist Glenn Carell works at his post on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. Nearly everything on Wall Street is tumbling as fear about a slowing U.S. economy worsens and sets off another sell-off for financial markets around the world. (AP Photo/Richard Drew)

Trader Gregory Rowe works on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024.(AP Photo/Richard Drew)

Specialist Dilip Patel works at his post on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. Nearly everything on Wall Street is tumbling as fear about a slowing U.S. economy worsens and sets off another sell-off for financial markets around the world.(AP Photo/Richard Drew)

FILE - Trader John Romolo works on the floor of the New York Stock Exchange, Aug. 2, 2024. Japan's benchmark Nikkei 225 stock index has lost 12.4% on Monday, August 5, 2024, in the latest bout of sell-offs that are jolting world markets. (AP Photo/Richard Drew, File)

FILE - People pass the New York Stock Exchange on July 30, 2024 in New York. Japan's benchmark Nikkei 225 stock index has lost 12.4% on Monday, August 5, 2024, in the latest bout of sell-offs that are jolting world markets. (AP Photo/Peter Morgan, File)

A currency trader reacts near a screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, Aug. 5, 2024. (AP Photo/Ahn Young-joon)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top center left, and the foreign exchange rate between U.S. dollar and South Korean won, top center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, Aug. 5, 2024. (AP Photo/Ahn Young-joon)

A monitor shows the Nikkei 225 stock index in Tokyo, Monday, Aug. 5, 2024, indicating at one point, over 2,537 points of lowering. (Shohei Miyano/Kyodo News via AP)

A photographer takes a photo of a screen showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, Aug. 5, 2024. (AP Photo/Ahn Young-joon)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top center, and the foreign exchange rate between U.S. dollar and South Korean won, top right, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, Aug. 5, 2024. (AP Photo/Ahn Young-joon)

A currency trader passes by a screen showing the Korea Composite Stock Price Index (KOSPI), top center left, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, Aug. 5, 2024. (AP Photo/Ahn Young-joon)

A currency trader works near a screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, Aug. 5, 2024. (AP Photo/Ahn Young-joon)

A person walks in front of an electronic stock board showing Japan's Nikkei 225 index Friday, Aug. 2, 2024, in Tokyo. Shares in Europe and Asia tumbled Friday, with Japan’s Nikkei 225 index slumping 5.8% as investors panicked over signs of weakness in the U.S. economy. (Kyodo News via AP)

FILE - People pass the New York Stock Exchange on July 31, 2024 in New York. World shares have tumbled on Friday, August 2, 2024, with Japan's Nikkei 225 index slumping 5.8% as investors panicked over signs of weakness in the U.S. economy.(AP Photo/Peter Morgan, File)

A board above the trading floor shows the closing number for the Dow Jones industrial average, at the New York Stock Exchange, Friday, Aug. 2, 2024. Stocks tumbled Friday on worries the U.S. economy could be cracking under the weight of high interest rates meant to whip inflation.(AP Photo/Richard Drew)

CLEVELAND (AP) — Rookie Kyle Manzardo hit a two-run, go-ahead homer in the eighth inning and Emmanuel Clase recorded his 46th save as the Cleveland Guardians rallied to beat the Minnesota Twins 4-3 on Monday night to tighten their grip on the AL Central.

With Josh Naylor on second after a double, Manzardo connected on the first pitch from Griffin Jax (4-5), sending it deep into the right-field seats for his third homer to trigger an eruption of joy in Cleveland's dugout and throughout Progressive Field.

“I'm so happy for him,” said Guardians manager Stephen Vogt, who was overcome with emotion during his postgame news conference. “Everyone who grows up wanting to play baseball has dreamed of that moment happening. The smile on his face looking back at our dugout, that was incredible.”

Vogt paused to compose himself.

“My favorite part is Naylor at second base standing there watching it and cheering, waiting for him at home plate with a smile on his face,” Vogt said, his eyes reddened by tears. “To see two teammates come together like that, that's powerful stuff.”

Manzardo said his trip around the bases was unforgettable.

“I floated a little bit,” he said. “I don’t remember all of it, honestly.”

Their MLB-leading 40th come-from-behind win moved the Guardians 7 1/2 games ahead of the defending division champion Twins. It also reduced Cleveland's magic number for clinching a playoff berth to two.

Clase, who has built a strong argument for Cy Young consideration, worked the ninth for his 33rd consecutive save and No. 46 this season, tying him with José Mesa (1995) for the club's single-season record.

“It’s really special,” Clase said of catching Mesa. “It's all about the focus, being able to stay focused on every single pitch and to execute every single pitch when I get the chance to pitch.”

Rookie Andrew Walters (1-0) picked up his first career win as Cleveland's top-ranked bullpen threw 6 1/3 scoreless innings to bail out starter Matthew Boyd, who didn't get out of the third.

Pablo López pitched into the seventh inning for the Twins, but Minnesota's bullpen couldn't protect the lead.

Byron Buxton hit a two-run single for the Twins, who dropped to 8-2 against the Guardians in 2024.

Minnesota's division chances are essentially done, and every loss puts a possible wild-card spot in jeopardy.

“Our margin of error keeps shrinking and shrinking,” said López. "Now it's to the point we got to take it one game at a time, one pitch at a time, one at-bat at a time. Today will be a tough pill to swallow.

“We still have a shot. Everyone's aware of the standings. There's a scoreboard wherever you go.”

The Twins took a 3-0 lead in the third and chased Boyd, who gave up a double to Carlos Correa and then hurt himself by loading the bases with a pair of two-out walks.

Correa scored on a passed ball and Buxton brought in Minnesota's next two runs with a single that deflected off Boyd's glove into center. As Guardians second baseman Giménez tried to reach it behind the bag, he collided with umpire Chad Fairchild, who was doing all he could to get out of the way.

Giménez needed a few minutes to gather himself but stayed in.

KWAN UPDATE

Guardians All-Star left fielder and leadoff hitter Steven Kwan missed his fourth straight game with lower back soreness. Kwan went through a strenuous pregame workout and Vogt said the team should have a better handle on a timeframe for Kwan's return Tuesday.

Kwan is batting just .201 in the second half after leading MLB with a .352 average at the All-Star break.

TRAINER'S ROOM

Guardians: Vogt said RHP Alex Cobb (middle finger blister) is scheduled to throw a bullpen in “the next couple days” and providing there no setbacks, he's expected to be sent out for a minor league rehab start. The 36-year-old has only made three starts since Cleveland acquired him in a July trade from San Francisco.

UP NEXT

Guardians RHP Gavin Williams (3-9, 5.23 ERA) starts Tuesday's game against Twins rookie RHP Zebby Matthews (1-3, 7.11).

AP MLB: https://apnews.com/hub/mlb

Cleveland Guardians relief pitcher Emmanuel Clase, front right, celebrates with catcher Austin Hedges, left, after they defeated the Minnesota Twins in a baseball game Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Cleveland Guardians catcher Austin Hedges, left, and relief pitcher Emmanuel Clase, right, celebrate after they defeated the Minnesota Twins in a baseball game Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Cleveland Guardians' Kyle Manzardo, right, celebrates as he runs the bases with a home run in the eighth inning of a baseball game against the Minnesota Twins, Monday, Sept. 16, 2024, in Cleveland. Twins' third baseman Royce Lewis is at left. (AP Photo/Sue Ogrocki)

Minnesota Twins' Carlos Santana (30) watches his single with Cleveland Guardians catcher Bo Naylor, left, in the sixth inning of a baseball game Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Minnesota Twins starting pitcher Pablo Lopez (49) reacts as he is taken out of the game by manager Rocco Baldelli, left, in the seventh inning of a baseball game, Monday, Sept. 16, 2024, in Cleveland. Twins's Carlos Correa is at right. (AP Photo/Sue Ogrocki)

Cleveland Guardians manager Stephen Vogt, left, gestures to home plate umpire Carlos Torres after Bo Naylor, right, was called out on strikes in the fifth inning of a baseball game against the Minnesota Twins, Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Cleveland Guardians starting pitcher Matthew Boyd (16) is taken out by manager Stephen Vogt, left, in the third inning of a baseball game against the Minnesota Twins, Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Cleveland Guardians' Matthew Boyd pitches in the first inning of a baseball game against the Minnesota Twins, Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Cleveland Guardians second baseman Andres Gimenez, second from left, is checked out after colliding with second base umpire Chad Fairchild in the third inning of a baseball game against the Minnesota Twins, Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Minnesota Twins center fielder Byron Buxton crashes into the outfield padding after catching a fly ball for an out against Cleveland Guardians' Bo Naylor in the second inning of a baseball game Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Minnesota Twins' Ryan Jeffers, center, gets high-fives in the dugout after scoring in the third inning of a baseball game against the Cleveland Guardians, Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Minnesota Twins center fielder Byron Buxton jumps to catch a fly ball for an out against Cleveland Guardians' Bo Naylor in the second inning of a baseball game Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Minnesota Twins' Pablo Lopez pitches in the first inning of a baseball game against the Cleveland Guardians, Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Cleveland Guardians right fielder Will Brennan catches a fly ball for an out against Minnesota Twins' Will Castro in the fourth inning of a baseball game Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Cleveland Guardians' Josh Naylor gestures from second base after hitting a double in the eighth inning of a baseball game against the Minnesota Twins, Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Cleveland Guardians third baseman Jose Ramirez catches a foul ball for an out against Minnesota Twins' Carlos Santana in the fourth inning of a baseball game Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Cleveland Guardians relief pitcher Emmanuel Clase reacts after his teams defeated the Minnesota Twins in a baseball game Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Cleveland Guardians' Emmanuel Clase pitches in the ninth inning of a baseball game against the Minnesota Twins, Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)

Cleveland Guardians' Kyle Manzardo reacts as he runs the bases after hitting a home run in the eighth inning of a baseball game against the Minnesota Twins, Monday, Sept. 16, 2024, in Cleveland. (AP Photo/Sue Ogrocki)